MicroEcon Midterm Practice Quizlet
Refer to the diagram. An increase in quantity supplied is depicted by a:
move from point y to point x
Refer to the diagram, which shows demand and supply conditions in the competitive market for product X. If supply is S1 and demand D0, then
0F represents a price that would result in a shortage of AC.
In the accompanying table,. the price inelasticity of demand for pizza between prices of $14 and $12 per pizza when income is $1000 per month is :
1
A nation can produce two products: steel and wheat. The table below is the nation's production possibilities schedule: Refer to the above table. A change from combination C to B means that:
1 unit of steel is given up to get 15 more units of wheat
A nation can produce two products: tanks and autos. The table below is the nation's production possibilities: Refer to the above table. In moving from combination C to B, the opportunity cost of producing 100 more autos is:
1 unit of tanks
When the price of a product is increased 10 percent, the quantity demanded decreases 15 percent. The price-elasticity of demand coefficient for this product is:
1.5
Answer the question on the basis of the following production possibilities tables for two countries, North Cantina and South Cantina: Refer to the tables. If North Cantina is producing at production alternative B, the opportunity cost of the eleventh unit of consumer goods will be:
1/8 of a unit of capital good
If a factor of production has no production cost and has a fixed supply, then payments to that factor constitute what economists call:
Economic rent
Which of the following is an activity of government that is not an activity of private firms?
Enforcing involuntary transactions.
Which of the following is a key difference between the economic activities of government and those of private firms?
Government has the legal right to force people to do things; private firms do not.
Suppose that Coca Cola and Pepsi are substitutes in consumption. If the price of Coca Cola decreases, then which of the following graphs would be relevant for Pepsi?
Graph C
A nation can produce two products: steel and wheat. The table below is the nation's production possibilities schedule: Refer to the above table. In moving stepwise from possibility A to B to C ... to F, the opportunity cost of a unit of steel in terms of wheat:
Increases
A nation can produce two products: tanks and autos. The table below is the nation's production possibilities: Refer to the above table. If the nation produces more and more tanks, the opportunity cost of each additional tank in terms of autos:
Increases
The law of increasing opportunity costs states that:
Increases in the production of one good require larger and larger sacrifices of the other good
The price paid for the use of money is called:
Interest
According to the law of demand, what is the relationship between price and quantity demanded?
Inverse
Suppose two workers can harvest $46 and three workers can harvest $60 worth of apples per day. On the basis of this information we can say that the:
Marginal revenue product of the third worker is $14
Of the countries discussed in this infographic other than the United States, which country has the highest wage for software engineers?
Mexico
Cost-benefit analysis is used to determine whether the benefits of providing a ______________ outweigh the costs.
public good
For which type of good does the textbook describe the use of cost-benefit analysis?
public goods
Nonrivalry and nonexcludability are the main characteristics of:
public goods.
If the supply and demand curves for a product both decrease, then equilibrium:
quantity must decline, but equilibrium price may rise, fall, or remain unchanged.
Answer the question on the basis of the given supply and demand data for wheat: Refer to the data. If price was initially $4 and free to fluctuate, we would expect the:
quantity of wheat supplied to decline as a result of the subsequent price change.
Refer to the diagram. A decrease in demand is depicted by a:
shift from D2 to D1.
Refer to the diagram. A decrease in supply is depicted by a:
shift from S2 to S1.
An improvement in production technology will:
shift the supply curve to the right.
Refer to the diagram. A price of $20 in this market will result in a:
shortage of 100 units.
If the demand for labor increases and wages do not immediately adjust, there will be a
shortage of workers, and the equilibrium wage will eventually rise.
If the marginal utility of good A to a consumer is 15 and its price is $3, and the marginal utility of good B to the same consumer is 12, and its price is $4, then the consumer
should increase his or her consumption of good A.
Answer the question on the basis of the following production possibilities tables for two countries, North Cantina and South Cantina: Refer to the tables. Suppose that resources in North Cantina and South Cantina are identical in quantity and quality. We can conclude that:
North Cantina has better technology than South Cantina in producing consumer goods but not capital goods.
A nation can produce two products: tanks and autos. The table below is the nation's production possibilities: Refer to the above table. According to the production possibilities schedule, a combination of 4 tanks and 650 autos is:
Not attainable because the nation does not have sufficient resources
A movement from one point to another along the production possibilities curve would imply that:
Society is producing a different combination of outputs
Answer the question on the basis of the following production possibilities tables for two countries, North Cantina and South Cantina: Refer to the tables. Suppose that North Cantina is producing 2 units of capital goods and 17 units of consumer goods while South Cantina is producing 2 units of capital goods and 21 units of consumer goods. We can conclude that:
South Cantina is fully and efficiently using its resources, but North Cantina is not.
Suppose you manage a convenience mart and are in charge of ordering products but do not set the price. The home office provides the prices. In your area the income elasticity of demand for peanut butter is -2.5. Due to local factory closing, you expect local incomes to decrease by 15% on average in the next month. As a result you should;
Stock 37.5% more peanut butter on the shelves
Which of the following is a source of government failure?
The enormous size and scope of government.
Consider the market for customer service representatives. Based on the salaries that are listed in the infographic and what we know about demand and supply, which statement can be supported?
The equilibrium wage of customer service representatives is greater in Mexico than in China.
What is a major opportunity cost of going to college on a full-time basis?
The foregone income that could be earned working full-time job
Which of the following is a common solution to the free-rider problem?
The government provides the good and then pays for its production through taxation.
A change in which of the following will cause a change in the quantity demanded of coffee?
The price of coffee
A change in which of the following will cause a change in the quantity supplied of coffee?
The price of coffee
The term market failure refers to
a market that fails to allocate resources efficiently.
Rent control is an example of
a price ceiling.
Economists use the term "demand" to refer to:
a schedule of various combinations of market prices and amounts/quantities demanded.
Refer to the table. Suppose that demand is represented by columns (3) and (2) and supply is represented by columns (3) and (5). If the price were artificially set at $6:
a shortage of 40 units would occur.
Refer to the following figure. At a price of $5, this market is experiencing
a shortage.
The basic difference between consumer goods and capital goods is that:
consumer goods satisfy wants directly while capital goods satisfy wants indirectly.
The government's ability to coerce can enhance economic efficiency by:
correcting market failures.
As the interest rate increases, the price of a bond will
decrease.
A normal good is one:
for which the consumption varies directly with income.
In the case of negative externalities, social costs are ____________ internal costs.
greater than
The larger the positive cross elasticity coefficient of demand between products X and Y, the:
greater their substitutability.
Unlike a private good, a public good:
has benefits available to all, including nonpayers.
Opportunity cost is the ______________ alternative that must be sacrificed in order to get something else.
highest-valued
A firm that wants to employ workers should
hire workers as long as the wage is less than the value of the marginal product.
A market is in equilibrium:
if the amount producers want to sell is equal to the amount consumers want to buy.
A firm's resource input, total output of labor, and product price schedules are given below. If labor is the only variable input, how much labor should the firm employ if the wage rate is $15 per day?
5 units
A leftward shift of a product supply curve might be caused by:
some firms leaving an industry
Externalities are
sometimes negative and sometimes positive.
For which of the following goods would you expect demand to be the most responsive to a rise in price?
spaghetti
In 2007, the price of oil increased, which in turn caused the price of natural gas to rise. This can best be explained by saying that oil and natural gas are:
substitute goods and the higher price for oil increased the demand for natural gas.
Suppose the cross price elasticity of demand for butter and margarine is equal to .96 while the answer for water and lemon is -0.13. This means that butter and margarine are ___________ while water and lemon are _____.
substitutes; complements
Which of the following is a solution to negative externalities?
taxes
Any point inside the production possibilities curve indicates:
that more output could be produced with the available resources.
A positive externality or spillover benefit occurs when:
the benefits associated with a product exceed those accruing to people who consume it.
Opportunity costs exist because:
the decision to engage in one activity means forgoing some other activity.
Demand-side market failures occur when:
the demand and supply curves don't reflect consumers' full willingness to pay for a good or service.
Supply-side market failures occur when:
the demand and supply curves don't reflect the full cost of producing a good or service.
Refer to the diagram, in which S1 and D1 represent the original supply and demand curves and S2 and D2 the new curves. In this market the indicated shift in supply may have been caused by:
the development of more efficient machinery for producing this commodity.
The income and substitution effects account for:
the downward-sloping demand curve
Graphically, the market demand curve is:
the horizontal sum of individual demand curves.
A negative externality or spillover cost occurs when:
the total cost of producing a good exceeds the costs borne by the producer.
At the equilibrium price:
there are no pressures on price to either rise or fall.
Non-excludability describes a condition where:
there is no effective way to keep people from using a good once it comes into being.
Refer to Figure 5.16, If the price of a scoop of an ice cream cone is $2, Jason's income is
$300.
Refer to the diagram. If this is a competitive market, price and quantity will move toward:
$40 and 150, respectively.
If the interest rate is 5%, what is the future value of $5,000 three years from now?
$5,788
$500 invested at an annual interest rate of 8 percent will be worth how much at the end of one year?
$540.
A production possibilities frontier with constant opportunity cost is
a straight downward-sloping line
Refer to the diagram. A price of $60 in this market will result in:
a surplus of 100 units.
Refer to the table. Suppose that demand is represented by columns (3) and (2) and supply is represented by columns (3) and (5). If the price were artificially set at $9:
a surplus of 20 units would occur.
For which of the following goods is supply the most responsive to a change in price?
hot dog vendor
At all Sports Bar, a bottle of beer costs $4; a slice of pizza costs $2; Jimmy has $10 to spend for beer and pizza; Jimmy will consumer____slices of pizza and ____bottles of beer
1:2
If the payment to an input is pure economic rent, then reducing that payment will:
Not influence the availability of the input
Refer to the diagram, in which S1 and D1 represent the original supply and demand curves and S2 and D2 the new curves. In this market:
an increase in demand has been more than offset by an increase in supply.
By choosing to consume at the consumer optimum, consumers will
maximize their total utility.
The market system does not produce public goods because:
private firms cannot stop consumers who are unwilling to pay for such goods from benefiting from them.
Market failure is said to occur whenever:
private markets do not allocate resources in the most economically desirable way.
Refer to the following graph. The demand curve slopes downward because
prices and quantity demanded move in opposite directions.
Refer to the table. Over the $6-$4 price range, supply is:
inelastic.
A price ceiling is a legally imposed ___________ price.
maximum
A firm's supply curve is upsloping because:
beyond some point the production costs of additional units of output will rise
The law of diminishing marginal utility states that:
beyond some point, additional units of a product will yield less and less extra satisfaction to a consumer.
Information problems create inefficient outcomes in:
both the private and the public sectors.
Refer to the diagram. A shortage of 160 units would be encountered if price was:
$0.50
Calculate the present value of an asset worth $2,000 four years from now if the interest rate is 6 percent.
$1,584.19.
Refer to the diagram. The equilibrium price and quantity in this market will be:
$1.00 and 200.
Refer to the diagram. A surplus of 160 units would be encountered if the price was:
$1.60.
Given the following table for a competitive firm which is maximizing profits, if the marginal revenue product of the last worker hired is $150 and three workers are employed per day, the price of a unit of output must be:
$10
Refer to the diagram, which shows demand and supply conditions in the competitive market for product X. If the initial demand and supply curves are D0 and S0, equilibrium price and quantity will be:
0F and 0C, respectively
Refer to Figure 5.16. At Point A, the slope of the indifference curve is
0.67.
Sara enjoys attending Chicago Cubs baseball games and eating baby back rib dinners. The accompanying figures shows two of her indifference curves for Cubs tickets and baby back rib dinners. If she is currently consuming 20 baby back rib dinners and 4 tickets to Cubs games, she would be equally happy to give up 8 dinners for ___ more tickets to Cubs games?
2
Answer the question on the basis of the following two schedules, which show the amounts of additional satisfaction (marginal utility) that a consumer would get from successive quantities of products J and K. Refer to the data. If the consumer's money income were cut from $52 to $28, and the prices of J and K remain at $8 and $4 respectively, she would maximize her satisfaction by purchasing:
2 units of J and 3 units of K.
A firm operating in a purely competitive labor market has the following marginal revenue product schedule. If the wage rate decreases from $17 to $13, by how much will the firm expand employment?
2 workers
A nation can produce two products: steel and wheat. The table below is the nation's production possibilities schedule: Refer to the above table. The marginal opportunity cost of the third unit of steel is:
20 units of wheat
A nation can produce two products: tanks and autos. The table below is the nation's production possibilities: Refer to the above table. The total opportunity cost of three units of tanks is:
350 units of autos
A nation can produce two products: steel and wheat. The table below is the nation's production possibilities schedule: Refer to the above table. If the nation uses all of its resources to produce only wheat, then its production combination will be:
A
Which of the diagrams illustrate(s) the effect of a decline in the price of personal computers on the market for software?
A only.
Which of the diagrams illustrate(s) the effect of a decrease in incomes on the market for secondhand clothing?
A only.
Which of the following would not shift the demand curve for beef?
A reduction in the price of cattle feed.
Which of the following is an example of a public good?
A weather warning system.
Which of the following is an example of market failure?
All of these. (Negative externalities, Positive externalities, Public goods)
Which of the following will cause a shift rightward in the supply curve for tobacco?
An improvement in the technology used in the production of tobacco
Which of the following will cause a decrease in market equilibrium price and an increase in equilibrium quantity?
An increase in supply.
Which of the following is a difference between stocks and bonds?
Bonds make interest payments; stocks pay dividends.
How does government's power to coerce behavior tend to reduce private-sector risk?
By enforcing contracts and discouraging illegal behavior that threatens private property.
Refer to the diagram. As it relates to production possibilities analysis, the law of increasing opportunity cost is reflected in curve:
C
Which of the following interest rates is usually the highest?
Consumer credit-card rate
In which of the following instances is the effect on equilibrium price dependent on the magnitude of the shifts in supply and demand?
Demand rises and supply rises.
According to the law of supply, what is the relationship between price and quantity supplied?
Direct
Flour is a factor of production of cupcakes. How will an increase in the price of flour affect the market for cupcakes?
Overall supply will decrease.
Which of the following statements is correct?
Price floors and price ceilings are typically imposed by the government.
Suppose the price of gasoline increases 10% and quantity demanded in Orlando drops 5% per day. The price elasticity of demand for gasoline in Orlando is:
Price inelastic
Which of the following statements is not true?
Public goods are only provided by government.
Refer to the following image. When a market is in equilibrium, which of the following is true?
Quantity supplied is equal to quantity demanded.
Refer to the diagram. The area that identifies the maximum sum of consumer surplus and producer surplus is:
a + b + c + d.
Refer to the diagram. Assuming equilibrium price P1, consumer surplus is represented by areas:
a + b.
Jennifer buys a piece of costume jewelry for $33 for which she was willing to pay $42. The minimum acceptable price to the seller, Nathan, was $30. Jennifer experiences:
a consumer surplus of $9 and Nathan experiences a producer surplus of $3.
If two goods are complements:
a decrease in the price of one will increase the demand for the other.
Microeconomics is concerned with:
a detailed examination of specific economic units that make up the economic system.
In order for a price floor to be binding, it must be set
above the equilibrium price.
Graphically, producer surplus is measured as the area:
above the supply curve and below the actual price.
Answer the question on the basis of the data given in the following production possibilities table: Refer to the table. For this economy to produce a total output of 3 units of capital goods and 13 units of consumer goods, it must:
achieve economic growth.
Refer to the diagram. If actual production and consumption occur at Q1:
an efficiency loss (or deadweight loss) of b + d occurs.
Refer to the diagram. If actual production and consumption occur at Q3:
an efficiency loss (or deadweight loss) of e + f occurs.
Suppose that the equilibrium price of a bike is $250. The government passes a law setting a maximum price of $150 for a bike. As a result of the legislation, there will be
an excess demand for bikes.
Refer to the table. In relation to column (3), a change from column (4) to column (5) would most likely be caused by:
an improvement in production technology.
Refer to the diagram, in which S1 and D1 represent the original supply and demand curves and S2 and D2 the new curves. In this market the indicated shift in demand may have been caused by:
an increase in incomes if the product is a normal good.
Public goods are those for which there:
are nonrivalry and nonexcludability.
In order for a price ceiling to be binding, it must be set
below the equilibrium price.
Refer to the diagram. Assuming equilibrium price P1, producer surplus is represented by areas:
c + d.
Black markets are associated with:
ceiling prices and the resulting product shortages.
Marginal utility is the:
change in total utility obtained by consuming one more unit of a good.
Refer to the diagram. Points A, B, C, D, and E show:
combinations of bicycles and computers that society can produce by using its resources efficiently
The true owners of a corporation are
common stockholders
Cost-benefit analysis attempts to:
compare the benefits and costs associated with any economic project or activity.
In the following question you are asked to determine, other things equal, the effects of a given change in a determinant of demand or supply for product X upon (1) the demand (D) for, or supply (S) of, X; (2) the equilibrium price (P) of X; and (3) the equilibrium quantity (Q) of X. Refer to the given information. An increase in the prices of resources used to produce X will:
decrease S, increase P, and decrease Q.
Refer to the table. In relation to column (3), a change from column (5) to column (4) would indicate a(n):
decrease in supply.
If X is a normal good, a rise in money income will shift the:
demand curve for X to the right.
If Z is an inferior good, an increase in money income will shift the:
demand curve for Z to the left.
People enjoy outdoor holiday lighting displays and would be willing to pay to see these displays but can't be made to pay. Because those who put up lights are unable to charge others to view them, they don't put up as many lights as people would like. This is an example of a:
demand-side market failure.
The type of demand that factors of production are said to have is
derived demand.
Which of the following is a type of incentive?
direct
The relationship between quantity supplied and price is _____ and the relationship between quantity demanded and price is _____.
direct; inverse
Payments to shareholders from corporate profits are known as:
dividends.
Refer to the diagram. If actual production and consumption occur at Q2:
efficiency is achieved.
Limited liability rules:
encourage stock investing by limiting shareholder risk of loss
A producer's minimum acceptable price for a particular unit of a good:
equals the marginal cost of producing that particular unit.
Answer the question on the basis of the given supply and demand data for wheat: Refer to the data. If the price in this market was $4:
farmers would not be able to sell all their wheat.
Suppose the government decides the Big Mac is an American tradition. To recognize the value of the Big Mac, the government passes legislation making it illegal sell a Big Mac for less than $8. The equilibrium price of a Big Mac is $4. As a result of the government legislation, there will be
fewer Big Macs bought and sold than before.
In the financial capital market savers and investors interact through
financial intermediaries.
Suppose that government officials want to increase the population, so they offer a $1,000 payment to the parents of each child born. Which of the five foundations of economics best describes the thinking of these government officials?
incentives
In the following question you are asked to determine, other things equal, the effects of a given change in a determinant of demand or supply for product X upon (1) the demand (D) for, or supply (S) of, X; (2) the equilibrium price (P) of X; and (3) the equilibrium quantity (Q) of X. Refer to the given information. An improvement in the technology used to produce X will:
increase S, decrease P, and increase Q.
Given a downsloping demand curve and an upsloping supply curve for a product, an increase in the price of a substitute good (from the buyer's perspective) will:
increase equilibrium price and quantity.
Refer to the table. In relation to column (3), a change from column (2) to column (1) would indicate a(n):
increase in demand.
A government subsidy to the producers of a product:
increases product supply.
A demand curve:
indicates the quantity demanded at each price in a series of prices.
A market:
is an institution that brings together buyers and sellers.
Refer to the diagram. The combination of computers and bicycles shown by point F:
is attainable but implies that the economy is not using all its resources.
A public good:
is available to all and cannot be denied to anyone.
The upward slope of the supply curve reflects the:
law of supply.
The two main characteristics of a public good are:
non-rivalry and non-excludability
If one person's consumption of a good does not preclude another's consumption, the good is said to be:
nonrival in consumption
An inferior good is:
not accurately defined by any of these statements.
A positive statement is one that is:
objective and is based on facts.
Economists use the concept of ceteris paribus to examine a change in ____________ in a model, while assuming that all other variables remain constant.
one variable
The basic formula for the price elasticity of demand coefficient is:
percentage change in quantity demanded/percentage change in price
Which point on the graph below is unattainable because the economy does not have enough resources to produce it?
point E
Which point on the graph below represents an inefficient use of society's resources?
point F
Which of the following is NOT an example of a public good?
pools
Interest is a reward for
postponing consumption.
Refer to the diagram. A government-set price ceiling is best illustrated by:
price A.
The owners of preferred stock
receive preferential treatment in the payment of dividends
In a market economy, the government's power to coerce can:
reduce private-sector risk and increase economic efficiency.
Refer to the table. In relation to column (3), a change from column (1) to column (2) would mostly likely be caused by:
reduced taste for the good.
The term "quantity demanded":
refers to the amount of a product that will be purchased at some specific price.
Because of the free-rider problem:
the market demand for a public good is nonexistent or understated.
According to the marginal-cost-marginal-benefit rule:
the optimal project size is the one for which MB = MC.
If a firm can sell 3,000 units of product A at $10 per unit and 5,000 at $8, then:
the price elasticity of demand is 2.25.
By an "increase in demand," economists mean that:
the quantity demanded at each price in a set of prices is greater.
At the point where the demand and supply curves for a product intersect:
the quantity that consumers want to purchase and the amount producers choose to sell are the same.
Suppose your friend can obtain concert tickets for $100 but you can't get them for less than $300. Your friend sells the tickets to you for $200. Which of the five foundations of economics best describes this activity?
trade creates value
Graphically, if the supply and demand curves are linear, consumer surplus is measured as the triangle:
under the demand curve and above the actual price.
The supply curve for land is ordinarily
vertical.
The maximum amount of money that company shareholders can lose on their investment in the corporation is:
whatever they paid for the shares in the company.
A product market is in equilibrium:
where the demand and supply curves intersect.
Present value is best defined as the:
worth or value today of future expected returns or costs.
Answer the question on the basis of the data given in the following production possibilities table: Refer to the table. A total output of 3 units of capital goods and 4 units of consumer goods:
would involve an inefficient use of the economy's scarce resources
When total utility is maximized, marginal utility will be
zero.
Which of the following is a positive economic statement?
Stock prices rose to a new record last month for the fourth month in a row
Ownership of a single corporation is represented by what investment?
Stock.
The ABC Computer Company wants to increase the quantity of computers it sells by 5%. If the price elasticity of demand is 2.5, the company must
decrease price by 2.0%.
If consumer incomes increase, the demand for product X:
may shift either to the right or left.
The price elasticity of demand
measures the responsiveness of quantity demanded to
The law of supply indicates that, other things equal:
producers will offer more of a product at high prices than at low prices
Other things equal, if the price of a key resource used to produce product X falls, the:
product supply curve of X will shift to the right.
Refer to the diagram. The highest price that buyers will be willing and able to pay for 100 units of this product is:
$60.
Refer to the information. If the Mudhens' management wanted to maximize total revenue from the game, it would set the ticket price at:
$7.
If the interest rate is 5%, what is the present value of $10,000 received three years from now?
$8,638
If the interest rate is 6% per year what is the present value of $1,000 that you will receive two years from now?
$889.99
A firm's labor input, total output of labor, and product price schedules are given below. Labor is the only variable input. Refer to the above table and information. What is the marginal revenue product of the fifth worker?
$9
Answer the question on the basis of the following two schedules, which show the amounts of additional satisfaction (marginal utility) that a consumer would get from successive quantities of products J and K. Refer to the data. What level of total utility is realized from the equilibrium combination of J and K, if the consumer has a money income of $52 and the prices of J and K are $8 and $4 respectively?
276 utils
Oranges costs $2 per pound and starfruit cost $5 per pound. The table shows Ned's total utility from eating various amounts of oranges and starfruit. How many pounds of oranges and starfruit should Ned eat, if Ned has $26?
3 pounds of oranges, 4 pounds of starfruit
Answer the question on the basis of the following two schedules, which show the amounts of additional satisfaction (marginal utility) that a consumer would get from successive quantities of products J and K. Refer to the data. If the consumer has money income of $52 and the prices of J and K are $8 and $4 respectively, the consumer will maximize her utility by purchasing:
4 units of J and 5 units of K.
Refer to the data. The value for Y is:
45
A firm's labor input, total output of labor, and product price schedules are given below. Labor is the only variable input. Refer to the above table and information. How many workers will the profit-maximizing firm hire if the wage rate is $8 per day?
5
Based on the figure below, what is the opportunity cost in terms of wings when producing 20 more pizzas if the economy is efficiently producing 150 wings and 50 pizzas?
60 wings
The first Pepsi yields Craig 18 units of utility and the second yields him an additional 12 units of utility. His total utility from three Pepsis is 38 units of utility. The marginal utility of the third Pepsi is:
8 units of utility.
Refer to Table 5.1. The total utility of five hamburgers per day is
80.
Refer to the figure. At a price floor of $6, this market is experiencing
a surplus.
Which of the following is an example of capital as a factor of production?
a wind turbine on a farm
Where there are established, well-defined private property rights, externalities will be
less prevalent.
Scarcity refers to the __________ nature of society's resources.
limited
Bonds represent:
loans to governments and corporations.
In which time period is demand most elastic?
long run
Sara enjoys attending Chicago Cubs baseball games and eating baby back rib dinners. The accompanying figures shows two of her indifference curves for Cubs tickets and baby back rib dinners. If a new health report is released stating that there is a connection between baby back rib dinners and heart attacks and this concerns Sara, each combination of Cubs tickets and baby back ribs will now yield for Sara
lower utility
On a backward-bending labor supply curve, at the point the curve bends back the substitution effect
must be less than the income effect.
Suppose that a 20 percent increase in the price of normal good Y causes a 10 percent decline in the quantity demanded of normal good X. The coefficient of cross elasticity of demand is:
negative and therefore these goods are complements.
We would expect the cross elasticity of demand between dress shirts and ties to be:
negative, indicating complementary goods.
The limiting of one's work to a particular area is referred to as
specialization.
Answer the question based on the following data. Refer to the above data. Over which price range is the demand unit-elastic?
$12-$10
If the interest rate is 15%, what is the future of value of $10,000 two years from now?
$13,225
If the interest rate is 10%, what is the present value of $25,000 received two years from now?
$20,661
$200 invested at an annual interest rate of 5 percent will be worth how much at the end of one year?
$210.
Refer to the table. If demand is represented by columns (3) and (1) and supply is represented by columns (3) and (4), equilibrium price and quantity will be:
$9 and 60 units
A profit-maximizing firm operates in purely competitive product and resource markets, with the following resource and production schedules. The product price is $10 per unit and the cost per worker is $540. How many workers will the firm employ?
5
David's marginal utilities is in the table, the price of milkshakes is $2 and the price of burgers is $5; If David's income is $10, how many milkshakes and burgers does he buy?
5 shakes and 0 burger
Suppose that the equilibrium price of a bike is $250. The government passes a law setting a maximum price of $150 for a bike. As a result of the legislation, there will be
a smaller number of mountain bikes sold than before the legislation.
Refer to the table. Over the $8-$6 price range, supply is:
inelastic.
Consumer surplus:
is the difference between the maximum prices consumers are willing to pay for a product and the lower equilibrium price.
Producer surplus:
is the difference between the minimum prices producers are willing to accept for a product and the higher equilibrium price.
The utility of a good or service:
is the satisfaction or pleasure one gets from consuming it.
Refer to the diagram. Other things equal, this economy will achieve the most rapid rate of growth if:
it chooses point A
The four factors of production are:
land, labor, capital, and entrepreneurial ability.
According to the concept of the time-value of money:
money is more valuable to a person the sooner it is received.
The Latin term "ceteris paribus" means:
other things equal.
Suppose that burgers and fries are complements in consumption. If the price of fries increases,
overall demand for burgers will decrease.
The demand curve shows the relationship between:
price and quantity demanded
The law of demand states that, other things equal:
price and quantity demanded are inversely related.
The supply curve shows the relationship between:
price and quantity supplied.
In this market, economists would call a government-set minimum price of $50 a:
price floor.
An increase in the quantity demanded means that:
price has declined and consumers therefore want to purchase more of the product.
The price elasticity of demand for widgets is 0.80. Assuming no change in the demand curve for widgets, a 16 percent increase in sales implies a:
20 percent reduction in price.
Refer to Table 5.1. Assume that a store is giving hamburgers and sodas away for free. Consumers can have as many sodas and hamburgers as they want, but the food has to be consumed ont unit at a time. If George has already had one soda and two hamburgers, then George
is indifferent between consuming the second soda or the third hamburger.
The construction of demand and supply curves assumes that the primary variable influencing decisions to produce and purchase goods is:
price.
Assume a drought in the Great Plains reduces the supply of wheat. Noting that wheat is a basic ingredient in the production of bread and potatoes are a consumer substitute for bread, we would expect the price of wheat to:
rise, the supply of bread to decrease, and the demand for potatoes to increase.
Which of the following is an assumption that underlies the construction of a production possibilities frontier?
that the technology available for use in production remains constant
